ASX 8-Day Losing Streak|Oil at 125, RBA Rate Hike Next

Oil, Hormuz, ASX Collapse

Brent crude crossed US$125 a barrel this week — a four-year high — and the S&P/ASX 200 just logged its eighth consecutive day of losses, its longest losing streak in eight years. Those two facts are not a coincidence. They are the same event, seen from two different angles.

The mechanism runs like this. On February 28, US and Israeli strikes targeted Iranian military infrastructure and triggered an effective blockade of the Strait of Hormuz — the chokepoint through which roughly 20% of global seaborne crude passes. Oil markets repriced immediately. Brent jumped nearly 8% in a single overnight session last week alone, pushing past US$120. By Thursday April 30, Brent had touched US$125. That price surge flows directly into Australian transport, manufacturing, and household energy costs.

The first corporate casualty to confess was Woolworths. The supermarket reported quarterly food sales up 5.9% and like-for-like growth of 5.3%, easily beating the 4% the market had pencilled in. But rising fuel costs tied to the Middle East conflict forced management to cut full-year food earnings guidance from top-end growth to mid-to-high single digits. Shares fell 7.7% on the day. Coles dropped 3.6% in sympathy. Two of the most defensive stocks on the exchange — supposed safe havens — got hit harder than the index itself. That signals something beyond routine sector rotation. It signals that rising energy costs are now moving inside the domestic earnings cycle, not just through financial market sentiment.

On the resource side, the read was more complex. BHP fell 1.98% and Rio Tinto fell by the same amount as oil pressured operating costs. MinRes bucked the trend, surging 5% after upgrading production guidance across iron ore, lithium, and mining services. But MinRes's earlier guidance had specifically flagged exposure to jumbo-sized diesel price pain — the upgrade came despite costs, not because of them. Capstone Copper posted record quarterly EBITDA but explicitly noted fuel costs creeping higher. The broader materials index fell 2.65%, dragged by gold stocks slipping to a one-month low around US$4,543.

CPI 4.6% and the RBA Trap

The oil shock fed into the March inflation print in a way that now corners the Reserve Bank of Australia in a move with no clean exit.

The ABS reported annual CPI at 4.6% for the twelve months to March — up sharply from February's 3.7%, and the highest reading since September 2023. Almost all of the monthly jump came from automotive fuel, which surged 32.8% in March alone. Fuel contributed 1 full percentage point to the monthly 1.1% increase. Strip out petrol, and monthly inflation would have been just 0.1%. The quarterly trimmed mean — the RBA's preferred gauge — held at 3.3%, still stubbornly above the top of the 2-3% target band.

Here is the trap. The RBA has already raised the cash rate twice in 2026, bringing it to 4.10%. Market pricing now sits at 76% odds of a further 25 basis point hike to 4.35% at next Tuesday's meeting — matching the 2024 cycle peak. Economists at HSBC, MLC, and Ebury all expect the hike to proceed. Their argument: core inflation is too elevated for the RBA to pause, regardless of whether the headline number is being driven by imported energy costs that the cash rate cannot meaningfully control.

That is precisely the problem that Guardian economist Greg Jericho raised publicly this week. Raising the cash rate does not lower the price of oil. It does not reopen the Strait of Hormuz. What it does is compress mortgage repayments for the millions of Australian households already absorbing fuel price shocks at the bowser. The RBA's own preferred instrument — the trimmed mean — remained flat at 3.3%, signalling no acceleration in domestic price pressures. Domestic non-tradable inflation actually fell from 5.0% to 4.6%. Market services inflation fell from 3.5% to 3.1%. The domestic economy is not running hot. The imported energy shock is.

The counterargument from Ebury is that the labour market remains resilient enough to sustain another hike without triggering a damaging contraction. CreditorWatch's Ivan Colhoun takes the opposite view, noting that auction clearance rates and confidence surveys are already turning, and that the unknown duration of the Hormuz closure adds asymmetric downside risk to any tightening decision. Colter Bay Capital's Mark Wang put it more directly: Australia is heavily exposed to housing, and each additional basis point pulls spending away from households and small businesses into debt servicing — at a moment when the inflation source is one the RBA cannot fix.

Oil Shock: Who Survives

Beneath the index-level losses, the oil shock is sorting the market in ways that won't be visible in the headlines for another quarter.

The distinction that matters is between producing miners and developing miners. A producing miner — running trucks, diesel shovels, and freight to port — absorbs the oil price directly. Higher diesel is a direct compression of margins. For a mining developer still in the drilling-and-permitting stage, the same oil surge barely touches the cost structure. Studies continue. Permits advance. The fuel bill, if any, is trivial compared to a producing operation. When oil spikes and rate hike fears return together, the market tends to dump the entire sector indiscriminately. That creates a valuation gap that historically closes when the shock reverses.

Gold is the other filter. The gold price slipped to around US$4,543 this week, down roughly 1%, creating what Morgans described as a buying opportunity across ASX 200 gold names. Morgans issued buy ratings on Newmont with a $208 target after a strong quarterly beat, Pantoro Gold at $6.29 despite softer Q3 production, and Regis Resources upgraded to buy at $10.07 following a 5% pullback. Capricorn Metals impressed with $507 million in cash and gold on hand, up from $457 million the prior quarter, and Canaccord Genuity maintained a $19.85 price target — a 72% return if achieved. The gold case is straightforward: if the Hormuz blockade persists, inflation stays elevated, real rates stay negative, and safe-haven demand supports the gold price. The risk is a negotiated reopening of the strait that quickly drains the geopolitical premium.

Lithium runs a different logic. WTF with PUR's Aaron Revelle articulated it clearly: oil shocks accelerate EV adoption timelines. Pursuit Minerals' view is that the higher fuel costs run, the stronger the structural case for battery vehicles, which tightens long-run lithium demand. Chinese LCE futures rose 2.5% on Thursday, and lithium stocks were among the few green patches on a broadly red ASX. That thesis requires the shock to be prolonged enough to shift consumer behaviour, not merely temporary enough to be absorbed and forgotten.

The weight of evidence points toward continued ASX pressure in the near term, with the most likely path being an RBA hike on May 6 that adds another layer of rate sensitivity onto an economy already absorbing a fuel shock. That base case holds as long as the Strait of Hormuz remains effectively closed and oil stays above US$110. If diplomatic talks between Washington and Tehran produce a breakthrough — Trump's stated precondition is a nuclear agreement — oil could retrace sharply, April's CPI spike would partially reverse in the May print, and the RBA could choose to pause rather than hike again beyond 4.35%. In that scenario, the ASX's eight-day losing streak would look like an overshoot rather than a trend.

The benchmark to watch is next Tuesday's RBA decision at 2:30pm AEST, alongside the US-Iran diplomatic calendar. If Brent crude is still above US$115 on Monday morning, the hike is almost certain. If it breaks below US$105 before then, the calculus shifts.